Study On The Determinants Of Variable Pay Plan Design

The globalization of the economy and the intensification of the competition make modern enterprises depend more and more on creativity and go-aheadism of their employees. Enterprise managerial pattern is developing to highly participant democratic management. Along with this kind of adjustment of managerial policy and administerial concept, enterprise traditional pay system couldn't satisfy the requirements of new managerial strategy. Thus, fundamental changes of traditional pay system are especially important, and correspondingly to make pay motivation of the employees become a hot topic in current pay research.Variable pay, which means pay varies according to performance and competitive advantage of company, is springing up in the pay system and becoming a developing direction. It realizes for enterprises qualified pay that based on performance of the team or the whole company. Meanwhile, it supports participant management that makes it become a means of organizational revolution. Currently, domestic research on variable pay remains at an initial stage and foreign studies on this field are more thorough. However, most research is just introductive theoretic discussion, with insufficient attention given to contextual determinants that may affect variable pay plan design.In this paper, we first analyze the necessary of studying on variable pay plan and indicate its definition, classification and design process. Then on this basis, we point out three main determinants of variable pay plan design-organization's environment, organization's pay strategies and organization's characteristics, meanwhile construct a preliminary framework to illustrate these contextual determinants. At last, we analyze how each determinant influence the design of variable pay plan, and obtain some conclusions and suggestions with guidable significance for the pay design of current companies.